Coinbase Opposes Move to Outlaw Rewards Linked to Stablecoin Transactions

Jimmy Aki
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On November 13, Coinbase challenged a request from major US banking groups to ban merchant rewards, cashbacks, and discounts for customers who pay with a stablecoin, warning that the proposal could distort competition and limit how Americans make digital payments.

Regulators Face Pressure Over Interpretation of GENIUS Act

The dispute turns on how the GENIUS Act should be read. The law stops stablecoin issuers from giving interest or any form of yield to people who hold their tokens.

What remains unclear is whether outside players, including exchanges, payment partners, or merchants, can run their own reward programs for users.

Banking groups argue that such benefits amount to an indirect interest that violates the intent of the law. They claim that any financial advantage connected to the issuer, even if delivered through a separate business, should fall under the law’s restrictions.

Coinbase disagrees. Faryar Shirzad, the company’s chief policy officer, cited an excerpt from the Coinbase Institute insight, urging regulators to rely strictly on the statutory language.

https://twitter.com/faryarshirzad/status/1989068495989141867?s=20

He argued that Congress designed the law to limit only what an issuer may offer, not what users may gain from unrelated third-party programs.

Shirzad warned that widening the prohibition to outside businesses would give regulators broad power to interfere with loyalty incentives, merchant discounts, and similar offerings.

He added that it would be inappropriate for traditional banks to influence how stablecoin users spend or manage their assets once those tokens leave the issuer’s hands.

Banks Brace for Shifts as Stablecoin Adoption Expands

The second layer of the dispute is directly tied to the future of finance. As it stands, the banking groups appear worried that the growing use of yield-bearing stablecoins could weaken the traditional banking system.

Banks depend on attracting customer deposits through high-interest savings products to support the loans they issue.

Data from the US Treasury Department strengthens this concern. In its Q1 2025 report, published in April, the agency projected that US-dollar stablecoins could reach a market value of around $2 trillion by 2028.

The same report also noted that widespread stablecoin adoption could take out over $6.6 trillion in deposits from the banking sector. Such a loss could change how banks operate, lend, and compete.

Global interest is already accelerating. On October 28, Western Union announced ongoing works to build a dollar-backed stablecoin on the Solana blockchain. It aims to launch this digital asset in the first half of 2026.

The previous month, the US Commodity Futures Trading Commission revealed plans to allow stablecoins as collateral in derivatives markets. Acting Chair Caroline Pham expressed her belief that stablecoins could become the so-called killer app for modern markets.

While Coinbase continues to defend innovation, regulators face pressure from all sides. The future of payments now sits at the centre of a much larger debate over power, technology, and financial freedom.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.